Where is the market headed?
Nifty has witnessed its third consecutive green candle, and more importantly, it is the second instance of breaking the previous two-day high. That two-day high break is a very critical metric we observe at Weekend Investing.
The global markets have also done well. Oil prices have eased a little bit despite the ongoing geopolitical tension. The fact that the global markets have done well yesterday and today speaks volumes about what we can kind of expect from the markets going into the short-term future at least. Asian markets did relatively better than European markets; in fact, Cospi was up about 5% if I’m not wrong. Some of the other Asian indices were also doing really well, up about more than 1%, 2%, or 3%. European indices ranging between 0.25% to 1% were also doing really well.
Another important news item to watch out for today is the Fed announcement regarding interest rates. With all the news surrounding the supply constraints of oil and gas, we will have to wait and see the narrative from the Fed regarding how they view the situation, how inflation has started to creep into the economy, and how central bankers all across the globe are expected to deal with interest rates
There is an interesting tweet for today. Alok had posted this tweet about J Prakash Associates, which was once a stock market darling in power, infra, and cement. It made the most out of the 2003–2007 rally, going up from about 10 or 20 rupees all the way to 300, recording 15–20x sort of gains.
It was a fantastic performance throughout that entire bull rally. From there, see what has happened: the stock has completely plummeted and went all the way down to zero. The tweet mentioned it went down to 2.42, but the point is that it took a little over 20 years for this stock to go to zero.
This tweet specifically talks about ignorance and how a lot of people are ignorant about what is happening in the markets. The National Company Law Tribunal has approved the takeover of this company by Adani Enterprises. Maybe the name Adani has sprung some optimism into some investors, leading to transactions and people buying purely because of that. However, the company will be delisted from both NSE and BSE. Shareholders will get a big zero for their shares because the debt is more than equity and higher than its assets. This results in absolute zero value for all shareholders; even banks won’t get their full money.
Market Overview
Moving on to the stock market performance and where the market is headed: Nifty is up 0.83%. With three consecutive green candles, we are currently at 23,777. It is happy to see some green taking along. Medium-term and long-term trends remain negative, but the short term turning positive is a very, very healthy sign.
Nifty Next 50
The Nifty Next 50 index is up 1%, standing at 65,668. This index has a very similar trajectory to the Nifty and was one of the most beaten-down indices along with the small-cap index. Let’s hope for a very good recovery of stocks in the times to come, though there will be plenty of resistance for all indices going forward.
Nifty Mid and Small Cap
The Midcap index was up 1.87%, a phenomenal day where going past the two-day high was the major news. If we continue on this trajectory, we will potentially see some resistance levels, but today was an encouraging sign. The Small Cap Index was up 1.7% at 15,153, mirroring the Midcap index with a positive short-term trend while medium and long-term trends remain negative.
Bank Nifty
Nifty Bank rose 0.82%.
GOLD
Gold and silver have entered a zone of consolidation after a good rally and a breakdown; gold is stabilizing around the 15,753 mark, and silver is around the 2.52 lakh mark after a massive correction.
SILVER
Advance Decline Ratio
Looking at advanced decline trends, there were 415 advances versus 84 declines. Performance was consistent from the beginning till the end of the session, despite a slight dip and some profit booking towards the end.
Heat Maps
On the Nifty Heatmaps, IT led the performance. TCS, Infosys, HCL Tech, Zomato, Wipro, and LTIMindtree all did exceptionally well, recording gains in excess of 2%. We also saw good performance across auto stocks like Mahindra & Mahindra, Maruti, and Eicher Motors.
Except for some red pockets like Coal India, Hindustan Unilever, NTPC, and Sun Pharma, the rest of the markets were in fine fiddle. Some banking stocks experienced mixed outcomes, but the Nifty Next 50 also did really well, with green across the board except for Vedanta, Hindustan Zinc, and Adani Power.
Movers Of The Day
Movers of the day included Valiant Organics, up 20% on buying pressure, and MMTC, recording 17.89% gains following Public Enterprises Selection Board (PESB) meetings to appoint a new director.
Sectoral Overview
Sectorally, Media was up 3.3%, IT at 2.78%, and Real Estate at 2.75%. Tourism and Auto did well, while Nifty Metal and Nifty CPSE were flattish. Over the last year, the capital market index still leads with 51.4% gains.
Sector of the Day
Nifty Media Index
U.S. Market
In the US, the Russell 2000, NASDAQ 100, and S&P 500 showed modest gains, though some stocks like Eli Lilly and Intel were down.
Tweet Of The Day
To conclude, we look at the tweet of the day regarding a post by Capitalmind. It highlights that patience is actually the real edge someone can have during difficult circumstances. We are currently at about an 11% loss for this financial year. However, if you take a ten-year perspective, you have never been in a very difficult situation at all. That is the real edge.
Today, many people are debating where to invest or whether to move from Indian markets to foreign markets because the domestic markets have not done well recently. Negative markets always pave the way for healthy discussions regarding asset allocation and diversification, but this chart showcases that if you can sit through a 10-year cycle, the results are reasonable.
Even if you started in 2008—the worst ever 10-year phase—and saw a 60–65% correction followed by six or seven years of no gains, you still turned positive in the seventh year and ended the 10th year with a 7% CAGR. Starting right before a crash and ending with 7% is reasonable and nothing to panic about. In almost any other 10-year cycle, returns have been in the range of 10% to 20%. The last 10-year cycle resulted in a 14% CAGR, which is exceptional. Every bad time has always resulted in great times, making this a very good time to start investing.
